Wednesday, August 22, 2012

The Curse Of The DD214

The DD214 is a military document that shows your separation from active duty in the United States Armed Forces.

In the past this document was a benefit in competing for a job. But for Justin Claus of Racine, Wisconsin, not so much. He was even beat out of a job as a bouncer at a local Racine niteclub to a high school kid with a broken wrist.

"...Claus says he probably won't bring his DD214 along to future job interviews. And if he still can't find work, he has a Plan B: He wants to re-enlist and get the steady paycheck the military provides. But there's a catch — he must be off all medication for a year. That means he'll have deal with the pain of his physical injuries and his PTSD without the drugs that help him. Claus is frustrated that he is still unemployed and says if the military lets him back in, it'll be worth it.
He took his last pill a month ago."

The Navy Times is all giddy with the most recent unemployment figure showing 8.9% in July for post 9/11 veterans. Still above the national unemployment rate of 8.3%.

Tuesday, August 14, 2012

The Need For Speed

In 1998, the New York Stock Exchange (NYSE) allowed computer generated trading to buy/sell on the exchange. For some time this lowered the costs to investors and also caused the guys screaming their deals on the floor of the exchange to lower their costs in order to compete. But as time goes on and as humans are want to do, getting an edge, ever so slight, is the difference between winning and losing. There have been some spectacular glitches in the recent pass beginning with the flash crash of 2010 and ending recently with the Knight Capital Group screw-up.

Not to be deterred by the above, we learn that the need for speed has moved firms to consolidate so that they can physically shorten the cable distance between servers to increase data transfers and now firms our also moving from fiber optics to microwave technology in order to gain milliseconds over their competition. How is this impacting the investor? It is a mixed picture at this point. Fees are starting to increase and the spreads between buy/sell has narrowed to the extent that you really need large blocks of stocks to make money and of course trading in large blocks can also lose you  alot of money. High speed traders make money for their clients and themselves by selling on the slightest increase and buying on the slightest decrease of a share price. Small investors can't make the returns they did post 1998 because the spread until recently has been decreasing.

"Terrence Hendershott, a professor at the University of California, Berkeley, said he had been an advocate for technological innovation in the past, but had begun to wonder if the continuing battle for technological superiority had become too much.
You’ve got arguably too many people, in too small a space, and they just keep spending enormous amounts of money,” Professor Hendershott said. “Can I convince myself that we are really seeing a lot of benefits? No.”
NYT: "On Wall Street, the Rising Cost of Faster Trades", by Nathaniel Popper, August 13, 2012.
NYT: DealB%k, Wall Street's Race to the 48-Millisecond Trade, by Eric Owles, August 15, 2012.

Tuesday, August 7, 2012

Ignorance Is Bliss?

"Three years ago, the American actor Craig T Nelson appeared on a rightwing television show to complain about the size of the US government and discuss his intention to no longer pay taxes. His logic, if it deserves the label, was peculiar. 'I've been on food stamps, I've been on welfare. Did anybody help me out? No.' "

This quote leads off a book review in the Financial Times by Cardiff Garcia of the Wall Street Journal's economics editor's book by David Wessel, entitled, Red Ink: Inside the High-Stakes Politics of the Federal Budget. 

The book itself gets a favorable review for explaining the basics of the federal budget and with a few caveats, Mr. Garcia finds the book interesting, informative and short in length.

The review zeros in on some myths perpetrated by news shows, talk radio and politicians that filter down to the electorate. But, like the old party game of whispering something from one to another, by the end of the chain it resembles nothing like the original message.

Here are a few:

  • 50% of people polled believe the US spends 10% of the federal budget very year on foreign aid.
           We actually spend less the 1%.

  • 4 out of 10 people believe they do not use any government social programs.
           The people polled were recipients of either Social Security or unemployment benefits.

           [Sure they have contributed to both, but if you are fortunate to live a long life you will more than     recoup your contribution to the former and if you are unfortunate to remain on the latter for a long period of time you too will recoup your contribution.]

Wessel believes that currently the deficit is declining, but looming on the horizon is something that will lower our standard of living, and reduced all the things that make our nation competitive on the world stage ... it is rising healthcare costs. Don't think for  a minute that rising costs of healthcare is a positive correlation with rising quality of healthcare. We are older, we live longer and with an increasing disparity of national wealth, most of us are poorer. All these factors will, year after year, increase the deficit and eventually ruin the country. "Thirty years ago, one in every 10 dollars was spent on healthcare for the poor and elderly. It is now one in every four and the ratio will keep climbing."

The solution , to my mind, is political. The people we have elected to offices at the national level are not serving in the national interest and they achieve this by dumbing down the electorate with simplistic ideologies, and misinformation for furthering their political tenure, power and greed. So, the only way to stop this rest with an independently informed electorate. Maybe Mr. Wessel's book is a start?

Source: Financial Times, Book Review of David Wessel's, 'Red Ink: Inside the High-Stakes Politics of the Federal Budget', by Cardiff Garcia, August 6, 2012, page 8.